SAN FRANCISCO (7/17/97) - As Kaiser Permanente's 47 northern California hospitals and clinics turned into ghost towns for the second time this year, the professional aplomb of the giant HMO's PR flacks began to wear thin. In print and on the radio they began calling striking nurses "hysterical" and "out-of-control." These stubborn and recalcitrant workers, they seemed to say, simply wouldn't agree.

Of course, what Kaiser was offering them wasn't much of a deal. The company wanted thirteen separate concessions, including high copayments for family health coverage, two-tier salaries, and six-year wage freezes for thousands of its 7500 RNs. At the same time, it refused to negotiate over staffing and patient care issues. On the picketlines, nurses' angry response was loud and unmistakable.

The California Nurses Association's contract expired in January, and Kaiser basically stopped negotiating a couple of months later. On April 17, nurses walked out of the chain's northern California hospitals in a one-day work stoppage. Other union workers in the hospitals respected the picketlines.

But while the world's largest HMO was stiff-arming nurses, AFL-CIO unions representing Kaiser workers were seeking a radically different relationship. That afternoon in Los Angeles, AFL-CIO President John Sweeney and Kaiser's CEO announced they had concluded an historic agreement for labor-management cooperation, the National Union-Management Partnership Agreement.

The timing couldn't have been worse. CNA greeted the pact with predictable outrage. It stirred up a storm of controversy, focusing a spotlight on an agreement that, under other circumstances, might have passed with little notice.

As the AFL-CIO convention approaches this fall, the first since Sweeney's election, this dispute focuses attention on a growing debate in labor. Does militant struggle or partnership with large employers gain more for members faced with cost-cutting and downsizing? Can unions organize new workers and represent them through negotiations at the top? How important are alliances with consumers and the public in fighting managed health care?

Both the strikes and the agreement have roots in different sides of Kaiser's long relationship with union workers. In one sense, the agreement seeks to restore the partnership Kaiser had with unions when it was founded. But the strikes more closely reflect current reality - growing conflict between Kaiser labor and management, and between health care corporations generally, and their workers and patients.

Kaiser was started by Henry J. Kaiser, the New Deal capitalist who welcomed unions into his west coast steel mills and shipyards during World War II. It was the first HMO, in which workers paid a premium, usually under union health plans, and received care at the foundation's hospitals.

Kaiser at first stood above the managed-care revolution in healthcare. But eventually it saw its plan membership endangered by cutthroat competitors, and decided to adopt similar practices to compete. In recent years, Kaiser has shut a number of facilities, especially older ones in poor and working-class communities, while building new ones in more affluent suburbs.

The plan is expanding nationally, and even internationally. Increasingly it no longer provides care directly in its own hospitals, contracting with other chains. Its original flagship hospital in Oakland, California, is slated for closure. The large Sunset facility in Los Angeles is shutting its doors.

These cost-cutting moves have provoked growing criticism from patients, whose care has suffered, and Kaiser workers, hit by layoffs and demands for concessions. Patients have died during transfers from Kaiser facilities which no longer provide full emergency services. Some doctor bonuses have been tied to rationing care, and hospital stays for patients have been limited. The chain was recently found guilty of delaying settlements with patients forced into its in-house arbitration system. Management salaries now approach the million-dollar mark, and millions more are spent on anti-union consultants.

This is par for the course with most health-care providers today, as managed-care bean-counters cut costs and boost industry profits. But Kaiser was built by union healthcare dollars. A labor-management partnership in this situation was bound to be controversial.

The agreement sets up a Senior Partnership Committee of high level Kaiser officials and union officers, who discuss issues such as closures, expansion plans, and other changes affecting workers' jobs and income. Kaiser agrees to share information with unions about its business plans, which they agree to keep confidential. Kaiser agrees to recognize union representation for non-union employees, based on a card check. In return, the unions agree to encourage AFL-CIO members to enroll in the plan.

"The healthcare industry is changing very rapidly," explains Eliseo Medina, vice-president for the western region of the Service Employees International Union. "Under the agreement, if the company plans closures, we now have time to find an alternative. It creates a much more union-friendly environment."

The agreement doesn't cover parts of Kaiser's business plan in place when it was signed, including the Sunset closure in Los Angeles. In addition, while the agreement mandates discussion, it doesn't have an enforcement structure. If unions and Kaiser disagree, they revert to the rights (or lack of them) they have under their contracts or labor law.

In essence, it gives unions a right few have any longer in any industry - decision bargaining. They can discuss Kaiser decisions in advance which might eliminate jobs, and propose alternatives, not just talk about how cope with their effects. But, as Medina notes, "there's nothing in the agreement which mandates anyone to do anything."

The agreement was crafted by the AFL-CIO's Industrial Union Department, which coordinates bargaining at many companies with multiple unions. SEIU is by far the largest union among Kaiser's 55,000 union-represented employees, and will probably be the union which benefits most from the card check recognition process. Kaiser has about 10,000 non-union employees who could be organized, according to the IUD's Kevin Murphy. In addition, he notes, "the partnership calls for Kaiser to encourage other providers to adopt its union-friendly practices when work gets transferred to them."

In California, where the agreement is most controversial, almost all of Kaiser is already organized. But while workers in many other hospital chains in the north of the state belong to unions, in southern California unions only represent 8% of the workforce, almost all at the HMO. That undermines union bargaining power, and LA wages and conditions lag behind those in the north. Medina and SEIU are planning a major healthcare organizing drive in Los Angeles, with the resources and visibility the union gave to Justice for Janitors.

Potentially, however, the Kaiser agreement also undermines union clout. Once unions encourage members to leave other plans and go to Kaiser, they can't threaten to pull out of other providers when these other employers make the predictable vicious attack on organizing drives. Medina points out, however, that the partnership isn't exclusive, and other companies could get the same deal if they recognized the union.

"The partnership allows us to concentrate on the main problem, organizing the rest of the industry. Our problems come because we don't control it, and until we organize the vast majority of healthcare workers, we'll continue to have them," he says.

Yolanda Rios, a Los Angeles Kaiser worker and SEIU member, points out, however, that to use Kaiser as a base, the union has to become more militant, fight for a better contract in LA, train the rank-and-file to enforce that contract, and support them when they do. Rios was part of a caucus elected to leadership of SEIU Local 399 (the LA Kaiser local), but in the chaos and conflict with the old leadership following the election, the local was placed in its current trusteeship. "We don't think the partnership gives workers a voice," she says. "The Senior Partnership Committee takes things out of our hands."

She agrees that organizing the rest of the industry is important. "But our problem here has been that while the union organizes, it doesn't represent us well. We want to fight the company more effectively, and win better conditions at work. How does this agreement help?" she asks.

Both Rios and CNA assert that unions can't fight effectively over conditions which affect workers in the hospitals without taking on, at the same time, the quality of patient care. Kaiser has eliminated 14% of its nursing staff in three years, a total of 1300 jobs. When nurses are eliminated, or replaced with workers with less training or education, patient care deteriorates.

"You can't be on the side of the public and the side of the corporation at the same time," declares Rose Ann DeMoro, CNA's executive director. "The agreement places the union in the position of being a special interest, while we should be the strongest advocates for patient care. I agree with the importance of organizing, but we have to ask, organize to what end?"

While the partnership doesn't prohibit unions from advocating for better patient care, it does set up a cooperative relationship inconsistent with attacking the company. And while unions may learn important information affecting patient care from their partnership discussions, the agreement forbids them from making it public. "Instead of bringing these issues up in partnership discussions, we should use the power of collective bargaining," DeMoro says.

Relations between CNA and SEIU, once close allies, hit the skids when they put competing initiatives on the California ballot in the last election to control HMO abuses. Nevertheless, SEIU's huge Hospital Local 250 and other Kaiser unions in northern California have continued to vote to respect the nurses' job actions. Despite disagreement on the partnership, they have a lot to lose by division, since none can successfully strike the HMO without the support of the others.

The partnership was put to a vote of all the AFL-CIO unions involved. Thirty percent of their membership returned mail ballots, and 90% ratified it.

In the meantime, CNA settled contracts with other northern California hospitals with significant raises. Boosting the labor cost at Kaiser's competition undercut the company's argument that it needed concessions. In July, Kaiser went back to the table, three months after breaking talks off. But the giant HMO continued to propose concessions which CNA refused to accept it. It struck again for two days.

While holding out partnership's olive branch to some of its unions, Kaiser still seems bent on provoking hardball confrontation.